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Nov. 17 — Internal Revenue Service employees sent hundreds of unencrypted e-mails containing
sensitive taxpayer information, and some used personal e-mail accounts for official
agency business, its watchdog said.

Unprotected e-mails put taxpayers at risk of identity theft, or inappropriate disclosure
of information about their identity and tax returns, the Treasury Inspector General
for Tax Administration said in a
report released Nov. 17. The report reveals an awkward truth for an agency that is required to protect taxpayer
information and that is laser-focused on preventing data breaches.

TIGTA reviewed a random sample of e-mails that 80 employees in the Small Business/Self-Employed
Division sent during four weeks in May and June 2015, according to the report.

About half of the employees sent a total of 326 unencrypted e-mails that contained
information about 8,031 different taxpayers to other employees or non-IRS accounts,
according to the report. Six employees sent 20 e-mails to personal e-mail accounts
that “involved official IRS business,” TIGTA said.

‘Minimal Risk.’

The report doesn’t identify any instances where unencrypted information was sent to
an unintended recipient, SB/SE Commissioner Karen Schiller said in response to the
report. The majority of the e-mails were sent within the agency’s firewall, from one
employee to another, she said.

“These communications are within the extensive protections of the IRS firewall, and
pose a minimal risk of disclosure or access. But, nonetheless, we agree that encryption
provides an added layer of protection,” she said.

Lock It Down

While the IRS has penalties—ranging from a warning to removal—for employees that put
taxpayer information in unencrypted e-mails, there “was no evidence provided” that
the penalties were enforced, TIGTA said.

Encryption is an important security step to prevent unauthorized access to information.
The IRS should “consider the feasibility” of ensuring all tax return information is
encrypted, and consider requiring e-mails to be encrypted by default, TIGTA said.

The IRS should make sure managers understand and take appropriate disciplinary action
when e-mail violations occur. The IRS will send an e-mail to all managers to “stress
the importance of managerial awareness,” according to the report.

Information Exposed

The IRS also didn’t always share sensitive data through secure file transfer technology,
TIGTA found in a
separate report also released Nov. 17. TIGTA found 61 servers with “high-risk vulnerabilities,”
10 servers with outdated operating systems and 32 servers missing important security
patches, according to the report.

In response to the report, the IRS agreed to ensure that data sharing is authorized,
but said it isn’t possible to ensure end-to-end encryption on all data.

“We continue to have multiple process improvements underway at the IRS to further
ensure the appropriate controls are in place and enforced,” Gina Garza, the agency’s
chief information officer, said.

To contact the reporter on this story: Colleen Murphy in Washington at
cmurphy@bna.com

To contact the editor responsible for this story:
Meg Shreve at
mshreve@bna.com

For More Information

Text of the TIGTA report, “Employees Sometimes Did Not Adhere to E-mail Policies Which
increased the Risk of Improper Disclosure of Taxpayer Information” (2017-30-010),
is at
http://src.bna.com/j9p.

Text of the TIGTA report, “Improvements Are Needed to Ensure the Protection of Data
Transfers to External Partners” (2017-20-004), is at
http://src.bna.com/kal.

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